Philip Morris International Inc. (NYSE:PM)

The analysis of the financial data reveals significant changes in the composition and valuation of intangible assets over the observed periods.

Goodwill

Goodwill shows an initial moderate increase from 5,964 million US$ in 2020 to 6,680 million US$ in 2021. However, there is a notable surge in 2022, where goodwill nearly triples to 19,655 million US$, followed by a decline to 16,779 million US$ in 2023 and a slight further decrease to 16,600 million US$ in 2024. This pattern suggests substantial acquisitions or reassessments in 2022 with some subsequent impairment or revaluation adjustments.

Non-amortizable intangible assets

This category steadily rises from 1,289 million US$ in 2020 to 4,543 million US$ in 2023, then slightly decreases to 4,446 million US$ in 2024. The growth indicates ongoing investments or acquisitions of intangible assets that are not subject to amortization. This consistent increase reflects strategic accumulation or revaluation of such assets.

Trademarks

Trademarks exhibit small fluctuations over the years, with values around 1,200 million US$ in 2020 and 2021, rising to 2,050 million US$ in 2022, and peaking at 2,267 million US$ in 2023 before a slight decline to 2,134 million US$ in 2024. The pattern indicates moderate enhancement in trademark valuation or acquisition efforts with some minor reversals.

Reacquired commercialization rights for IQOS in the U.S.

This asset appears only in 2024 with a value of 2,777 million US$, representing a new addition in this period. It indicates a strategic reacquisition relevant to commercialization efforts in the U.S. market, which may impact future revenue streams.

Developed technology, including patents

Developed technology shows considerable volatility, rising sharply from 93 million US$ in 2020 to 859 million US$ in 2021 and peaking at 975 million US$ in 2022, followed by a decline to 774 million US$ in 2023 and a significant drop to 320 million US$ in 2024. This trend suggests fluctuating investment, impairment, or reassessment in technology assets.

Customer relationships and other

This asset class experiences a strong increase from 126 million US$ in 2020 to 1,390 million US$ in 2022, then jumps significantly to 3,843 million US$ in 2023 before a slight decrease to 3,712 million US$ in 2024. The trend points to growing valuation or acquisition of customer-related intangibles, reflecting an emphasis on customer base and related assets.

Amortizable intangible assets, gross carrying amount

The gross carrying amount of amortizable intangible assets shows a continuous and steep increase from 1,452 million US$ in 2020 to 8,943 million US$ in 2024. This reflects significant investment or capitalized costs associated with intangible assets subject to amortization.

Accumulated amortization

Accumulated amortization increases steadily in absolute terms (negative values), indicating the systematic amortization expense recorded over the years. It grows from -722 million US$ in 2020 to -2,062 million US$ in 2024, consistent with the increasing amortizable asset base.

Amortizable intangible assets, net

Net amortizable intangible assets (gross minus accumulated amortization) exhibit strong growth from 730 million US$ in 2020 to 6,881 million US$ in 2024. This highlights the rise in intangible assets subject to amortization after accounting for consumption.

Other intangible assets, net

Other intangible assets, net, increase substantially from 2,019 million US$ in 2020 to 11,327 million US$ in 2024. This strong upward trajectory demonstrates the expansion in intangible asset categories not explicitly detailed elsewhere.

Goodwill and other intangible assets, net

The sum of goodwill and other intangible assets, net, more than triples from 7,983 million US$ in 2020 to 26,387 million US$ in 2022, stabilizes around 26,643 million US$ in 2023, and further grows slightly to 27,927 million US$ in 2024. This overall growth underscores significant intangible asset accumulation, likely driven by acquisitions and investments, particularly evident in 2022.

In summary, the data reveal a notable expansion in intangible assets over the period, particularly marked by a substantial increase in goodwill and other intangible assets in 2022. Continuous growth in non-amortizable and amortizable intangible assets indicates active investment or acquisition strategies. The appearance of reacquired commercialization rights for IQOS in 2024 represents a strategic asset addition. Some amortizable intangible assets such as developed technology show variable trends, suggesting reassessments or impairments. The overall pattern points to an emphasis on strengthening the asset base related to intellectual property, customer relationships, and technology, likely aiming to support future revenue generation and market positioning.

Total Assets

Reported total assets show a decrease from 44,815 million US dollars in 2020 to 41,290 million in 2021, followed by a significant increase to 61,681 million in 2022. This rising trend continues moderately to 65,304 million in 2023, after which there is a decline to 61,784 million in 2024. Adjusted total assets follow a somewhat similar pattern but remain consistently lower than reported values, starting at 38,851 million in 2020, decreasing to 34,610 million in 2021, then increasing to 42,026 million in 2022 and 48,525 million in 2023 before falling to 45,184 million in 2024.

Stockholders’ Deficit

The reported total PMI stockholders’ deficit decreased in absolute terms from -12,567 million in 2020 to -8,957 million in 2022, indicating an improvement. However, it then worsened to -11,225 million in 2023 and further to -11,750 million in 2024. In contrast, the adjusted total PMI stockholders’ deficit remains significantly higher in negative values, starting at -18,531 million in 2020 and showing a decreasing trend through 2021 at -16,786 million, then sharply worsening to -28,612 million in 2022. The deficit slightly improves afterward to -28,004 million in 2023 but declines again to -28,350 million in 2024, indicating sustained and substantial negative equity adjustments.

Net Earnings Attributable to PMI

Reported net earnings increased from 8,056 million in 2020 to a peak of 9,109 million in 2021, followed by a slight decline to 9,048 million in 2022. Earnings then decreased more noticeably to 7,813 million in 2023 and further to 7,057 million in 2024. Adjusted net earnings mirror this pattern closely, with a critical exception in 2023 where adjusted earnings are higher at 8,478 million compared to reported earnings, suggesting some positive adjustments in that year before falling again to 7,057 million in 2024. Overall, earnings show a peak in early years followed by a declining trend in recent periods.

Net Profit Margin Trends

The reported net profit margin declines steadily from 28.08% in 2020 to 18.63% in 2024, with a notable drop occurring between 2022 and 2023, from 28.49% to 22.21%. The adjusted net profit margin, which accounts for goodwill adjustments, follows a similar downward trajectory but shows a slightly higher margin in 2023 at 24.1%, before aligning with the reported figure at 18.63% in 2024. This suggests that goodwill adjustments have a temporary positive effect on profit margins which diminishes by 2024.

Total Asset Turnover Analysis

The reported total asset turnover exhibits variability, increasing from 0.64 in 2020 to 0.76 in 2021, then declining sharply to 0.51 in 2022. It slightly recovers to 0.61 by 2024. The adjusted asset turnover ratios are consistently higher than the reported values, showing more stability and a similar pattern. The adjusted ratio peaks at 0.91 in 2021, drops to 0.72 in 2023, then rises again to 0.84 in 2024. This suggests that asset efficiency, when accounting for goodwill, is higher and somewhat more resilient over time compared to the reported figures.

Return on Assets (ROA) Observations

The reported ROA shows a significant decrease from 17.98% in 2020 to 11.42% in 2024. The decline is particularly pronounced between 2021 and 2022 where the percentage falls from 22.06% to 14.67%, then continues a gradual decline through 2024. The adjusted ROA values are notably higher, starting at 20.74% in 2020 and decreasing to 15.62% in 2024, maintaining a similar trend but reflecting improved performance when goodwill is considered. This indicates that the company's asset profitability is under pressure but remains more favorable under adjusted accounting.

Missing Financial Leverage and Return on Equity Data

There is an absence of data regarding financial leverage and return on equity for both reported and adjusted figures for all years. This lack of information limits the ability to analyze the company's capital structure and shareholder return dynamics over the period.

Overall Observations

The company displays declining profitability and asset efficiency over the five-year period, with both reported and goodwill-adjusted figures showing downward pressures. Adjusted data generally present a more optimistic performance perspective, particularly in profitability and asset usage. The fluctuations in asset turnover highlight variability in operational efficiency. The persistent decreases in net profit margins and ROA warrant attention, as they could signal challenges in maintaining profitability and effective asset utilization. The missing leverage and ROE data prevent a full assessment of the financial risk and equity returns during the period.

Net Earnings Attributable to PMI

The reported net earnings showed an upward trend from 8,056 million US dollars in 2020 to a peak of 9,109 million in 2021, followed by a slight decrease to 9,048 million in 2022. Subsequently, earnings declined more notably, falling to 7,813 million in 2023 and further to 7,057 million in 2024. Adjusted net earnings mirrored this pattern closely, except for 2023 where adjusted earnings were higher at 8,478 million, compared to reported earnings of 7,813 million, indicating some adjustments impacting that year specifically.

Net Profit Margin

The reported net profit margin remained relatively stable around 28% between 2020 and 2022, with a slight fluctuation (28.08% in 2020, peaking at 29% in 2021, and marginally dropping to 28.49% in 2022). However, a significant decline occurred in 2023 with the margin decreasing to 22.21%, and continuing downward to 18.63% in 2024. Adjusted net profit margin followed a similar trend but was slightly higher in 2023 at 24.1%, reflecting the effect of adjustments that year, before matching the reported margin at 18.63% in 2024.

Overall Trends and Insights

The financial data indicates a period of growth in earnings and profitability through 2021, transitioning into a decline beginning in 2022 and accelerating in 2023 and 2024. The divergence between reported and adjusted figures in 2023 suggests the presence of specific one-time or non-recurring items affecting reported results that year. Additionally, the consistent decline in profit margins in the latter years points to increased costs, reduced pricing power, or other operational pressures impacting profitability. The sharper decline in reported earnings compared to adjusted earnings in 2023 further supports the occurrence of unusual items negatively influencing that year's reported financial performance.

Total Assets

The reported total assets exhibit a fluctuating trend over the five-year period. Starting at 44,815 million USD at the end of 2020, there is a decline to 41,290 million USD in 2021. This is followed by a significant increase to 61,681 million USD in 2022 and a further rise to 65,304 million USD in 2023. However, a decline is observed again in 2024, with assets decreasing to 61,784 million USD. The adjusted total assets follow a somewhat similar pattern but at lower levels due to goodwill adjustments. The adjusted assets decrease from 38,851 million USD in 2020 to 34,610 million USD in 2021, then steadily increase to a peak of 48,525 million USD in 2023 before declining to 45,184 million USD in 2024.

Total Asset Turnover

The reported total asset turnover ratio starts at 0.64 in 2020 and improves to 0.76 in 2021, indicating enhanced efficiency in asset utilization. However, it decreases significantly to 0.51 in 2022, followed by slight improvement to 0.54 in 2023 and a stronger rebound to 0.61 in 2024. The adjusted total asset turnover shows a higher ratio across all years compared to the reported figures, reflecting the adjustments made for goodwill. It rises from 0.74 in 2020 to a peak of 0.91 in 2021, then declines to 0.76 in 2022 and further to 0.72 in 2023 before increasing again to 0.84 in 2024. This pattern suggests fluctuating operational efficiency, with a notable dip in 2022 and gradual recovery in subsequent years.

The analysis of the financial data over the five-year period reveals several notable trends and patterns related to the company’s assets and stockholders' equity position.

Total Assets

Reported total assets decreased from 44,815 million US dollars in 2020 to 41,290 million in 2021. This was followed by a significant increase to 61,681 million in 2022, continuing upward to 65,304 million in 2023, before declining to 61,784 million in 2024. The adjusted total assets show a similar trend but at lower values, starting from 38,851 million in 2020 and dropping to 34,610 million in 2021. Then, they increased to 42,026 million in 2022, further to 48,525 million in 2023, and finally declined to 45,184 million in 2024. This pattern indicates a period of contraction in 2021, followed by substantial growth in 2022 and 2023, and a slight reduction in the most recent year.

Stockholders’ Deficit

The reported total PMI stockholders’ deficit shows a decreasing absolute deficit from -12,567 million in 2020 to -8,957 million in 2022, suggesting improvement in equity position during these years. However, the deficit increased again to -11,225 million in 2023 and further to -11,750 million in 2024, indicating a deterioration in stockholders’ equity after 2022. The adjusted total PMI stockholders’ deficit exhibits a different pattern with larger negative values, starting at -18,531 million in 2020, improving slightly to -16,786 million in 2021, then sharply worsening to -28,612 million in 2022. Thereafter, it remained relatively stable, with modest decreases in deficit magnitude to -28,004 million in 2023 and -28,350 million in 2024. This suggests that once goodwill adjustments are considered, the company’s equity position faced significant pressure starting 2022 and has stabilized at a high deficit level thereafter.

Financial Leverage

The data for both reported and adjusted financial leverage ratios is missing, preventing the analysis of leverage trends over the periods covered.

In summary, the company experienced fluctuations in its asset base, with a notable dip in 2021 followed by increased assets in 2022 and 2023 and a slight decline in 2024. The stockholders’ deficit dynamics differ widely depending on whether goodwill adjustments are accounted for, indicating the material impact of these adjustments on the company’s equity. The absence of financial leverage data limits further insights into the company’s financial risk profile during this period.

Net Earnings Attributable to PMI

The reported net earnings showed an initial increase from 8,056 million USD in 2020 to 9,109 million USD in 2021, followed by a slight decline to 9,048 million USD in 2022. A more pronounced decrease is evident in 2023, with earnings declining to 7,813 million USD, and continuing to fall to 7,057 million USD in 2024.

The adjusted net earnings followed a similar trend, rising from 8,056 million USD in 2020 to 9,109 million USD in 2021, then remaining relatively stable in 2022 at 9,048 million USD. However, unlike the reported figures, the adjusted net earnings declined less sharply in 2023, recording 8,478 million USD before falling to 7,057 million USD in 2024. The adjustment appears to have partially mitigated the decline in 2023 but does not affect the downward trajectory in 2024.

Total PMI Stockholders’ Deficit

The reported total stockholders’ deficit has shown a fluctuating pattern. Starting at -12,567 million USD in 2020, the deficit decreased in magnitude to -10,106 million USD in 2021 and further to -8,957 million USD in 2022, indicating improvement. However, this trend reversed from 2023 onwards, increasing the deficit to -11,225 million USD, and further to -11,750 million USD in 2024, suggesting a deterioration in stockholders’ equity position.

The adjusted total stockholders’ deficit presents a different picture with substantially larger negative values throughout the period. The deficit improved from -18,531 million USD in 2020 to -16,786 million USD in 2021, but then sharply worsened to -28,612 million USD in 2022. This elevated deficit level slightly decreased to -28,004 million USD in 2023 and marginally increased again to -28,350 million USD in 2024. These figures highlight significant adjustments that greatly increase the stockholders’ deficit compared to reported values, reflecting a more strained equity base after goodwill adjustments.

Return on Equity (ROE)

No data is available for reported or adjusted ROE over the periods, preventing analysis of this profitability metric.

Summary

Overall, net earnings initially improved but faced a downward trend from 2022 onward, with adjusted figures showing a less severe decline in 2023. The reported stockholders’ deficit initially improved but deteriorated in the last two years, while adjusted deficit values reveal a much larger and more volatile negative equity position. The goodwill adjustment significantly increases the apparent stockholders’ deficit, underlining a potentially heightened risk or impairment issue. The absence of ROE data limits the assessment of equity profitability trends.

Net Earnings Trends

The reported net earnings attributable to the company show an overall decline from 8,056 million US dollars in 2020 to 7,057 million in 2024. There was an increase between 2020 and 2021 reaching a peak of 9,109 million, followed by a slight decrease in 2022. The decline continued more noticeably through 2023 and 2024. Adjusted net earnings, which take into account goodwill adjustments, largely follow the same pattern but show a less steep drop in 2023, indicating some adjustment effects temporarily softened the net earnings decline that year.

Asset Base Changes

Reported total assets exhibit considerable fluctuations over the period under review. Starting from 44,815 million US dollars in 2020, assets decreased to 41,290 million in 2021 before sharply increasing to 61,681 million in 2022 and peaking at 65,304 million in 2023. Thereafter, assets declined to 61,784 million in 2024. The adjusted total assets show a somewhat different trajectory, beginning at 38,851 million in 2020 and decreasing to 34,610 million in 2021, followed by increases through 2022 and 2023, and a slight decrease in 2024, but remaining notably lower than the reported figures. This suggests that goodwill adjustments significantly reduce the asset base reported in the later periods.

Return on Assets (ROA) Analysis

The reported ROA indicates a peak in profitability relative to assets in 2021 at 22.06%, after which it declines steadily through to 11.42% in 2024. The adjusted ROA shows a similar trend but consistently at higher levels than the reported ROA. Starting from 20.74% in 2020, the adjusted ROA rises to a peak of 26.32% in 2021 and then declines gradually to 15.62% by 2024. This pattern suggests that when goodwill is excluded, the company’s asset efficiency and profitability appear stronger, though both metrics indicate diminishing returns over time.

Overall Observations

The data reveal a peak in financial performance around 2021, followed by a trend of decline in net earnings and profitability through 2024. Asset values, both reported and adjusted, exhibit volatility with significant increases in 2022 and 2023 and partial reversals in 2024. The adjustments for goodwill notably reduce asset base values and enhance the apparent returns on assets, implying that the goodwill element has increased in recent years, potentially diluting asset efficiency when included. The downward trend post-2021 in earnings and ROA suggests potential challenges in maintaining growth and profitability going forward.